Learn All You Need to Know About Discount Percentage

When purchasing an item, we come across several terms, such as cost price, market price, discount, and selling price. Discounts are given to customers by shopkeepers to increase sales of goods. As the name implies, a discount describes the rebate or offer made by the company to the customer on the marked price.

Typically, the list price or marked price refers to the cost of the article declared by the manufacturer or seller, excluding any price reductions. If the list price of an item has been reduced or discounted, afterwards, the selling price would be the actual price of the article. Discounts are commonly described by terms like ‘off’ and ‘reduction.

What is the discount percentage?

In percentage discounts, the cost of a product or service is reduced by an amount per hundred. In other words, a discount is the lowering of the price of a product or service offered by a shopkeeper at the market price.

In addition to the rebate, the company will often offer a certain percentage to increase sales or clear older stock.

For instance, if a discount of 20% were applied to an item initially costing Rs. 100, the item would now cost Rs. 80.

Discount Percentage Formula:

Marked price or labelled price: The price marked by the seller on the item to be sold.

Discount % = It’s like a concession on the marked price (MP).

Discount is always applied to market price.

Now discount % is calculated taking marked price (MP) as a base so,

Discount will be (Marked Price – Selling Price).

Discount % will be (Marked Price – Selling Price) /Marked Price) * 100

Important Note: If there is no discount, the marked price becomes the selling price.

The equivalent of successive discount:

A single discount of the same, amounting to discount series of X% and Y% given by the seller or shopkeeper, can be evaluated in two ways, either by determining the 1st discount and then redetermining the discount on the first calculated discount or by directly using the formula which is equal to the formula mentioned below as :

  Total discount = (X + Y – XY / 100) %

For instance,

An item of Rs. 100 is available at a discount of 15 %. A 12% discount is then applied on top of the reduced price of the product. We say that 15% and 12% of discounts will be applied successively when this occurs.

Obtain a single discount equal to two subsequent discounts of 15% and 12% for an item.

The solution would be an article with a listed price of Rs 100.

Determining the total discount as (15 + 12 – 15*12 / 100) % which is equal to 25.2%

Significance of discount formula:

• Provides a tool for calculating the net payable amount of an item purchased.
• Help in comparing different prices of an item before and after the discount.
• Give the exact amount which can be saved when the discount is applied on the item.
• Customers are offered a discount to increase sales of a product or service.
• To get rid of the old stock.

Conclusion:

We studied the definition of discounts and discount percentages in the article, which describes a reduced price compared to the original listing price. An example of the percentage discount has been provided and discussed briefly. Also represented the formulas used to define discounts and percentage discounts. In day-to-day life, we encounter topics like this one which has practical usage in real-life scenarios while purchasing items from shopping, groceries, restaurants, food ordering, etc.